ABSTRACT
This chapter describes the housing provident fund (HPF) scheme in China to illustrate how compulsory saving for housing can help households to achieve homeownership. When HPF was first introduced in Shanghai in 1991, it covered state-owned institutions and enterprises and joint ventures between state-owned and private companies only. The HPF scheme is also a good example of libertarian paternalism. By making HPF contribution a default for both employers and employees, the scheme makes saving for housing easier. It deals with the procrastination issue effectively. The housing market is heavily influenced by demographics. This policy induced gender imbalance led to some intriguing changes in China’s housing market. Specifically, when there are fewer females available in the marriage ‘market’, males need good signals to increase their marriageability. By making the participation in the HPF scheme the default option, HPF participants are nudged to save for their future housing needs.
